The corn condition rating index continued to decline last week. The index stood at 246 at the end of July, down 9 points from a week earlier. This is approaching the level recorded last year at this time, when the index was 240. The average for this point in the season is 266. While the condition index implies a national average yield near 145, the index significantly underestimated yield potential last year, and that may be the case again in 2006.

The soybean index fell by four points last week, reaching 242. This is below the year ago level of 245 and significantly under the 10-year average of 258. The index last year at the end of July implied a poor crop, and the national average yield came in at a record high. However, August weather was favorable last year and that may not be the case this year. The index implies a yield of just under 40 bushels per acre, about 1 bushel per acre less than the figure used in the USDA's July supply and demand forecasts. The condition ratings are lowest in South Dakota, where 40% of the crop is rated poor or very poor. Ratings are also poor in Mississippi where 38% of the crop is in these two categories.

The spring wheat index dropped by another 9 points last week to 185. We have data back to 1991 and the index hasn't dropped that low during that entire 15 years of history. Harvest is well underway, with more than half of the crop in South Dakota in the bin. There is virtually no chance the crop can recover even if weather conditions improve significantly. 60% of the crop in South Dakota is rated poor or very poor and 36% of the North Dakota crop is in those categories.

The cotton condition index is down to 198 as of the end of July, down 2 points from a year earlier and 50 points below the 10-year average. Last year at this point, the index was 259, but yields were near record high in 2005. The only year we have with an index lower than the one in 2006 is 1998, when the index was 191 at the end of July. Everyone will be watching with interest USDA's August crop production report for both acreage harvested and expected yield. A crop of 20 million bales or less is likely.